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What is Moving Expense Reimbursement?
Moving expense reimbursements are tax-free fringe benefits offered to employees as long as the expenses qualify for reimbursement. The employer pays the deductible moving expenses.
These include:
- Transportation and storage costs.
- Travel expenses.
Every moving expense reimbursement given to an employee or on their behalf is considered taxable income for the employee and will be shown on their Form W-2. Federal income tax, state income tax, and social security taxes, as well as Medicare taxes, must be withheld from taxable reimbursements.
Is Moving Expense Reimbursement Taxable?
As moving expense reimbursement is offered in the form of a reimbursement, it is non-taxable income. Income tax on relocation allowance is exempt from certain taxes because of additional expenses incurred by relocating to a new place. (which are borne by the company). Also, no TDS is required to be deducted from it.
There is no specific limit on moving expense reimbursement as far as how much the employer must provide.
When you are filing for income tax, you need to mention these expenses for them to get exempted.
Why are Moving Expenses No Longer Deductible?
Some moving expenses are no longer deductible because they are personal or professional costs that cannot be deducted from gross income.
You can get reimbursed for parking fees and tolls you paid while moving, regardless of how you calculate your expenses.
Non-deductible expenses are:
- Costs of repairs and maintenance.
- Insurance.
- Depreciation for your car.
If you’re willing to claim these deductions, you ought to keep good documentation of all the expenses that may qualify for reimbursement.
Also, See: Wage Garnishments
